Tondamakers produced and sold 1,000 Tonda riding lawnmowers in Year 2. Relevant data follow:

Actual Results for Year 2:

Direct Materials: 11,000 Pounds at $19 .......................................................... $209,000

Direct Labor: 2,050 Hours at $31....................................................................... $ 63,550

Manufacturing Overhead ($205,000 fixed) ...................................................... $245,000

Actual Marketing and Administrative Costs ($320,000 fixed) .................. $380,000

Total Revenue: 1,000 Units at $940.................................................................. $940,000

Actual Machine Hours Worked........................................................................ 550 Hours

Standards and budgets for Year 1: Variable Costs per Unit:

Materials: 10 Pounds at $20................................................................................ $ 200

Labor: 2 Hours at $30........................................................................................... $ 60

Variable Overhead: .5 Machine Hours at $80 ...................................................... $ 40

Fixed Manufacturing Costs ........................................................................... $200,000

Sales Volume................................................................................................. 900 Units

Marketing and Administrative Costs..............................$350,000 + $50 per Unit Sold

Sales Price............................................................................................. $1,000 per Unit

Using the profit and cost variance framework that appears in Exhibit 10.7, explain the differences in operating profit between the budgeted and actual amounts.